philanthropy - All posts tagged philanthropy

The older you get the more charities you give to. That’s the revelation buried in U.S. Trust’s Study of High Net Worth Philanthropy. That’s because the wealthy spend a good chunk of their daily lives over time learning about charitable organizations, and with age become increasingly more sophisticated at weeding out ineffective charities, and adding on, at a greater pace, effective new ones. But here’s the key: Lance Bylow, managing director at U.S. Trust, claims that if you are starting out on this educational process, certain charitable research techniques will help you significantly reduce this 20-year learning curve.

First, the study: More than 1,400 wealthy families were surveyed about their giving habits, asked in-depth questions about the organizations they support. Philanthropic giving levels remain high—with 91% of wealthy families donating to charities. But here’s where the report gets interesting: If they were over age 70, they gave to 11 organizations on average. Baby boomers (over 50) donated to seven organizations, and young donors (50 and under) gifted to only five—less than half of the 70-plus crowd.

Impact investing seeks to advance social or environmental aims while earning market-rate returns, while philanthropy, of course, is giving money or assets outright to advance a specific cause.

According to U.S. Trust’s Insights on Wealth and Worth Survey released in May, 56% of respondents said they weren’t interested in impact investing because they didn’t want it to dilute or conflict with their philanthropic goals.

You hear so much about millennials slamming the older generation for leaving them a poisoned earth full of irreversible problems, but there is a substory that suggests the opposite. According to UBS’s “The ties that bind,” baby boomers and their millennial children or grandchildren work especially well together in financial relationships. John Mathews, the 51-year-old head of UBS’s private wealth management arm, says this deep bond between the generations is in fact changing age-old investment strategies in a profound way.

Consider, for example, a mid-50’s UBS client with a net worth of $200 million. In an effort to educate his children on investing, he asked them to attend a meeting discussing a $4 million donor-advised fund. He was looking to employ an asset allocation and diversification approach, hoping for long-term stability and less risk. . His three millennial children were, however, more interest in the high-growth technology industry and in sustainable, responsible, and impact investing (SRI’s). Realizing the value of the SRI movement that his children were engaged with, the client ultimately decided to put 40% of the assets in a diversified SRI portfolio.

Figuring out what to with your art collection, for estate planning purposes, is a complicated affair and solutions can range from donating works to a major museum to begging a family member to accept your cherished collectibles. But, let’s say it’s time to arrange your affairs, and you’re not quite ready to give up the artwork completely. There’s a way to keep the much-loved works on a part-time basis and still get the same tax benefits you get from giving a donation to a nonprofit.

You can do so by gifting a “fractional interest” in your artwork to a museum or charity of your choice, in effect sharing ownership of your painting with a worthwhile nonprofit. Say, for example, you decide to donate 50% of a painting worth $2 million to your local museum for their fall and winter exhibits. The IRS allows you to bring the work back to your home and enjoy it during the spring and summer seasons, while still claiming a tax deduction of $1 million, half the artwork’s market value.

No secret that the impassioned hunt for cancer drugs is global in nature, which is perhaps why UBS has come up with an innovative impact-investing vehicle intent on joining the good fight. The big hope: The UBS vehicle will not just find new drugs; it will goose the portfolio returns of families determined to leave a better world for the next generation.

Impact investing, while steadily on the rise, is an enormously time-consuming, demanding, and costly investment pursuit, mostly suited to Penta’s wealthy audience. That does not dim investors’ interest, but the specialist knowledge needed to do it right does raise barriers to entry for all but the wealthiest investors. A Chicago-based partnership, known as Benefit Chicago, is hoping to lure in a new breed of retail investor by taking the toil out of impact investing.

The John D. and Catherine T. MacArthur Foundation, one of the largest philanthropies in the country, along with the nonprofit financial institution, the Calvert Foundation, announce today that they are issuing in total $100 million in fixed-income instruments for the benefit of nonprofits and social enterprises in the Chicago area.

The rare fossils and feathered models in the latest Dinosaurs Among Usexhibit opening today at New York’s American Museum of Natural History are arresting, but the aesthetic appeal of such relics is nothing new to wealthy collectors. That’s a mixed blessing. Museums have a history of spending millions of dollars to outbid one another and secure spectacular skeletons, but now they’re more often coming up against affluent individuals whose deep pockets they can’t match. T. Rex skulls alone are routinely valued over $1 million.

Furthermore, though private enthusiasts who act responsibly are an integral part of the fossil market, in some cases scientific breakthroughs go unstudied and unseen because of unscrupulous actions on the dinosaur black market. Breakthroughs like those seen at the AMNH exhibit are dependent on rigorous science, spanning from a fossil’s discovery to its display, and even wealthy collectors who have the best intentions may be unwittingly doing harm—and could find themselves afoul of the law to boot. Actor Nicolas Cage famously relinquished a rare tyrannosaur skull—which Leonardo DiCaprio also bid for—when the U.S. attorney in Manhattan filed a civil forfeiture complaint to return it to Mongolia.

The major takeaway: Impact investing is a surprisingly big deal. Some 40% of the Fidelity respondents said they have as much as 20% of their assets allocated to impact investments, from a ­microfinance fund in Central America building ­affordable housing to micro­loans financing a start-up in ­India. Another 10% reported having more than 20% in the strategy.

There has been a lot of talk in the past few years about ­impact investing, which attempts to generate market-rate ­returns while advancing social or environmental goals (see Barron’s Penta cover story, Nov. 30). But how big of an ­impact is impact investing actually having? We asked Fidelity ­Investments to ­include several questions about the strategy in a survey it ­conducted with high-net-worth clients in December.

How do you dispose of so-so art? There’s no problem finding a classy museum or gallery to display a Titian or Twombly, but let’s get real. Most people discover that their treasured art pieces don’t make the cut for such high-end placement, and yet are too expensive, or personally valued, to simply toss into the trash. It’s the collector’s tortured take on the “Goldilocks syndrome,” where one option is too rarified and the other unworthy. For the art lover at that stage of life where they have to let go, it’s a stressful and emotional undertaking.

Many collectors’ first instinct, after trying to convince family members to adopt their collection, is to give the works to charity, says Carol Kroch, managing director of wealth and philanthropic planning at Wilmington Trust. But giving art to charities is tricky.

What do you do if your spouse is, say, a Sarah Lawrence College dance major with zero interest or understanding of financial matters—and you know you’re going to pass on before them? Your spouse can just about balance a checkbook on a good day, and you know you are never going to turn them into Carl Icahn, particularly not in the few years you have remaining. Furthermore, your estate is pretty complicated. And yet you love your spouse dearly and you really want to relieve them, even after your passing, of as much financial stress as possible.

What, we asked Robert Elliott, vice chairman of multifamily office Market Street Trust, can you realistically do to help a will fully finance-resistant spouse in these circumstances?

About Penta

Written with Barron’s wit and often contrarian perspective, Penta provides the affluent with advice on how to navigate the world of wealth management, how to make savvy acquisitions ranging from vintage watches to second homes, and how to smartly manage family dynamics.

Richard C. Morais, Penta’s editor, was Forbes magazine’s longest serving foreign correspondent, has won multiple Business Journalist Of The Year Awards, and is the author of two novels: The Hundred-Foot Journey and Buddhaland, Brooklyn. Sonia Talati is Penta’s reporter about town, both online and for the magazine. She previously worked for the Wall Street Journal and various television station affiliates around the country. Sonia has a B.A. in economics from the University of California, Los Angeles, and an M.A. from Columbia University Graduate School of Journalism.